Foreign insurers continue to find it tough making inroads in the huge Chinese market, according to a joint report from Ernst & Young (EY) and Oxford Economics.

Market share held by foreign property and casualty insurers has stalled at 1.3% since 2005.

Several players that dominate their home markets have either surrendered plans to grow their Chinese operations or cut back on Chinese partnerships.

IAG is among insurers that have decided to give the Chinese market a miss, preferring to direct resources to its domestic business, the report says.

In October last year IAG made public its decision to abandon a foray into China.

“Foreign insurers continue to face an uphill battle entering the market despite continuing, albeit slow, market liberalisation,” the report says.

“China remains the dominant engine of insurance market growth in emerging economies over the coming five years, even though the degree of its openness to foreign companies remains in question.”

The Chinese economy, the second biggest globally, is projected to account for almost 60% of premium growth among emerging markets, or about $US280 billion ($371.3 billion), by 2020.

Premiums from emerging markets are estimated to grow another $US480 billion ($636.6 billion) from 2015-20.

China’s rapidly expanding middle class, below-average insurance coverage and 1 billion-plus mobile phone users offer tantalising prospects for insurers with a digital focus.

“For foreign firms, developing a robust digital strategy to capitalise on the use of mobile devices for transactions offers a significant opportunity,” the report says. “Established insurers are already trying to promote more internet interactions between policyholders and agents, to improve cross-selling business opportunities.

“And some new insurers are trying to develop an internet-only business model.”

Overall, Asia is the place to be for insurers in search of new growth prospects, the report says.

The region, led by China and other high-performing economies including Malaysia, India and South Korea, outperforms Africa and the Middle East in terms of premium growth estimates.

 It will contribute almost 90% of insurance premium growth in emerging markets.

“The most attractive markets, which combine high potential growth with relatively lower risk, are mainly in Asia,” the report says.